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Top 10 Fintech Trends to Watch in 2018

FinTech is extremely popular topic these days and the industry has never been more dynamic. More and more companies come up with innovative solutions working both with B2B and B2C consumer groups. Emerging technology and creative minds blend together to infuse efficiency to business processes as well as everyday lives of citizens. Clients demands are growing rapidly with end users requiring more on-demand financial tools to meet their specific needs.

What are the choices the financial sector makes when considering a technical upgrade? What are the tendencies for the nearing future? When you glance at FinTech trends of the preceding period, you’ll discover there’s no one size fits all offerings that may bridge existing demand for digitalization and supply of digital tools.

Numerous startups, dedicated teams, banks, funds, custom software development companies are hiring a lot of rockstar developers, struggling to create the software solution that may provide exceptional user experience as well as become industry (or sub-industry) standard among all others, B2B, and B2C clients.

In our post we’ll explore the changing landscape of FinTech, note some bullet points that drive the industry and bring to your attention several companies that reshape the way finance looks today.

1. FinTech explores new horizons

When we look back a decade ago, FinTech companies were mostly tapping into banking sector and trying to single out products to improve. And that was it. Nowadays, tech innovation became more about digging the rabbit holes in order to find an opportunity other than a simple value proposition to a financial institution.
Here’s another way to think about it. Today, one of the recent FinTech trends amid the industry is to create multiple products, merge with promising startups as well as join the ties with like-minded companies to enhance the functionality of an existing stand-alone offering. Modern FinTech levels up the game by:
Having several ready-to-launch products in the pipeline to scale the business and offer more edge;
New FinTech joiners innovate by coming up with new approaches to boost personal touch;
Wealth management platforms go beyond conventional investment vehicles offering more flexibility to a broader range of investors.

2. Europe is on fire with its FinTech businesses going global

Through strategic alliances, European tech startups are making it through the noise in FinTech. To begin with, Klarna, an altpayment portal we were mentioning in one of our previous articles expands its online financial services and capitalizes on its banking license received last summer. Therefore, online shoppers can see Klarna’s pay-over-time option along with traditional PayPal as well as cryptocurrency options at the checkout. Similarly, German and the UK dare to compete with the industry players’ hub and spread their wings in the US. For instance, British Revolut has in mind to scale worldwide and start operations in North America bringing its revolutionary digital banking to the US and Canada with further steps to be made in Southeast direction.

3. Banks turn inwards to build their own digital advice

On weighing the current FinTech trends, top-tier American banks decided the game worth the candle and started pouring their funds into emerging tech. Along with big data analytics and personal finance management, banks pay more attention to FinTech and try to smoothen digitalization of their operations and harness the multifold benefits it has to offer. Therefore, the rules are slightly changing with incumbents going for in-house robo-advisory platforms rather than choosing off-the-shelf solutions to tune up according to their long-term goals.

4. Chinese FinTech is scorching hot

China is rising. The Celestial Empire sees more and more people deciding to put their assets to work and grow wealth. Besides, China’s Ant Financial Services Group has pinned up additional funds to its Yu’e Bao platform recently; the new additions are managed by Zhong Ou Asset Management Co and Bosera Asset Management Co and were included to grow company’s consumer pool. After all, at the end of 2017 Ant Financial's Yu'e Bao became the largest money market fund with assets under management reaching an all-time high of 165BUSD with alternative sources claiming the AUMs of “leftover treasure” being as high as $251B USD at that period of time.

5. Strengthening FinTech trends in emerging markets

First off, Brazilian urban population is more than 85% and almost half of the citizens don’t have access to traditional banking. What’s more, FinTech startups in Brazil target more financial sub-domains and offer innovation in digital banking, lending, wealth management and investing, personal finance as well as others. For instance, Brazilian Central Bank gives green light to peer-to-peer lending to stimulate competition among loan providers.

When it comes to Southeast Asians about 90% of them use Internet on the go and more than 250 millions of people are financially underserved by a banking sector. Local FinTech players are on the mission to enlarge their impact and head beyond their home-base in Asia. Singapore is one of the regional movers and shakers to have a close-up look at: the secondary market in trade loans player, CCRManager has sealed the deal and got 6.5MUSD in series A funding; the capital will be used towards flourishing the business and increasing presence.

6. ICOs to encourage more investors in FinTech

Although the golden rush has gone a bit south since New Year’s boom, digital money and ICOs as a way to scoop a seed capital for startups it yet to reach it’s boiling point. Looking back at 2017, Coinbase’s app was among the top favorite among Apple users with the company facing a very unusual at the end of the year. Too many users wanted to come aboard the crypto trading platform. Although some of the venture capitalists still feel slightly skeptical about digital currency, they cannot resist the itch of emerging wave for crypto that can bring more chances to profit from ICO campaigns.

7. The essence of FinTech infrastructure; a backbone of capital markets

While leveling up the back office operations that are often times left behind, both banks and pioneering startups greatly benefit from several aspect of FinTech infrastructure. You might wonder what paperwork has to do with innovation but let us check the following two aspects financial technology can help with:

  • Substituting legacy systems that no longer serve the new-generation services e.g. startups propose alternative cloud solutions to bring down the costs;
  • Open REST APIs of data platforms help aggregate capital market’s big data and equip financial institution with powerful suite of tools to serve their clients better.

8. More banks join the forces with RegTech

MIFid II in Europe, CRM2 in Canada, and recent GPDR changes push banks towards FinTech startups that can integrate the compliance capability in financial services with ease. RegTech often times is called the next big thing in banking. The reason behind such an opinion is obvious: banks are too slow to move on their own to adjust to changing landscape of regulations in order to boost efficiency in their services increasing the overall level of standardization. That is why banks are searching for the promising startups that may boost their software development efforts and improve overall compliance regulation.

9. Backing up the insurance sector

Along with Swedish Klarna, in our post about most promising FinTech trailblazers earlier, we spoke of health insurance startup Clover that offers patient-focuses plans. In order to keep up the pace of emerging FinTech trends, insurance sector is likely to look into its backend operations to streamline claim handling, record keeping and other laborious operations with automation tools supplanting human efforts. And another thing, among its predictions, one of the online media sources mentions highly custom-tailored insurance premiums enabled by big data analytics.

10. Banks and VC funds are looking closer at new blockchain and crypto projects

Lastly, banks and VCs are eager to look into not only new FinTech projects but explore the distributed ledger technology landscape in particular.
Off the record, many banks create innovation labs where inhouse engineers work on crypto products and add up more of blockchain-based capabilities to become more appealing to modern-day client. For the record, Canadian Ripple can boast of mobile app that would help Japanese with domestic payments. And in case you don’t know, Japan is a well-known FinTech in Asia: with its scarce natural resources, the country leads the way from technological perspective.

What’s the bottom line?

At first sight, FinTech as a sector might seem too much to bite off and too sophisticated. But the industry is a fast-rolling ball that doesn’t stand still a day with more and more unicorns popping up each moment. These startups utilize the potential of distributed ledger technology going far beyond just bitcoin and other altcoins that exchange hands.

Larger banking sector cannot deny the benefits modern technology can bring. Therefore, they can’t miss on an opportunity to jump in; they sail through regulatory pressure leaving the legacy systems behind and upgrading existing infrastructure with the help of FinTech solutions market has. The FinTech innovators create a new history of financial sector across the borders either tuning up existing technology so it’s ready for the future or building renowned solutions from the ground zero.

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